Charitable Planning Questions Families Can Discuss Over the Holidays

by Ken Nopar, Senior Philanthropic Advisor, AEF

Many AEF donors who have established donor advised fund (DAF) accounts want to engage their families and discuss their charitable plans for the near and distant future. These conversations often take place over the holidays, at summer cabins, or at other times when the family is together.

Each family situation is different. For some, the conversation is very natural and comfortable, while for others, it can be more challenging when there are strong differences and philosophies.

Usually, families want to initially have this discussion themselves, but there can be benefits to including a trusted family advisor who has knowledge of the financial, legal, or tax aspects of charitable giving.

Because AEF donors occasionally ask for help in starting this conversation, here are some questions they can use:

1. Why is philanthropy important to our family? What is our motivation for giving?
2. What is the history of philanthropy in our family? Who has been involved as a volunteer, donor, or has worked in the non-profit sector?
3. How involved do we want to be with our giving? Should we volunteer, serve on a board, go on site visits, attend conferences, collaborate with other donors, or just send in donations?
4. Which causes and charities are most important to each of us, and why?  Should we create a charitable giving mission?
5. Are there new areas of interest to anyone in the family?
6. Should we donate as a group, or is it OK to give separately?
7. Do we want our giving to be concentrated in the near future, throughout our lifetimes, or for generations to come?
8. Who wants to be involved, now and later? Who will be in charge of family giving in the future?
9. Do we want to support many or few charities, large or small ones?
10. Do we want to be public or private with our giving?
11. Should we plan and manage our giving ourselves, or would it be helpful to bring in charitable giving experts to help?
12. Are there particular assets that we own that nobody will want in the future that can be donated to a charity or donor advised fund account? Once donated and sold, should that be used as basis for our giving in the future?
13. How should we decide how much to give, and when should we discuss with our financial advisor and CPA so we get the maximum tax benefits?
14. Which past donations have provided us with the greatest satisfaction or regret?
15. Are there any charitable beneficiaries named in the estate plan? Shall we include some? Is a charitable legacy important to us?
16. Does the family have any charitable vehicles currently, and are there any challenges with them? Are there simpler and less expensive options such as donor advised funds?
17. Are we donating, or should we donate, the Required Minimum Distributions from our IRA to charity rather than pay taxes on the RMDs and then donate the after-tax amounts? Should we donate our traditional IRA to our DAF or other charity at death to avoid the significant taxes that would need to be paid if it is passed down to the children?
18. Are we fully aware of the advantages of donating assets other than cash?
19. What concerns does anyone have about our charitable giving?
20. What are the benefits and impact of our giving?

Usually, these initial conversations will generate awareness, understanding, purpose, and unity. If there is little agreement or understanding about how to proceed, advisors can often step in to help. When there has been a liquidity event and the family is just getting started on its philanthropic journey, or the family’s philanthropic efforts have been stuck in neutral or reverse for some time, an outside philanthropic advisory firm can be brought in to work with the family or help complement the work of the family’s professional advisors.

Though there may not be a pressing issue pertaining to charitable planning that needs to be immediately discussed with family and heirs, it is always easier and more impactful when these conversations take place ahead of any unforeseen event. Families who never have this discussion often wish they had done so previously, while the positive impact upon the families who plan in advance as well as upon the causes and charities they care about can be significant.

Ken Nopar is AEF’s Senior Philanthropic Advisor. He can be contacted at kennopar@aefonline.org .